Highlight AirAsia X 2Q loss widens to RM128.8m despite higher revenue

by **Cals** Wed 20 Aug 2014, 01:04

Highlight AirAsia X 2Q loss widens to RM128.8m despite higher revenue

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Tuesday, 19 August 2014 21:29

KUALA LUMPUR (Aug 19): AirAsia X Bhd’s (AAX) net loss increased to RM128.8 million for the second quarter ended June 30, from RM32.3 million in the year before, despite posting higher quarterly revenue.

This is the third consecutive losses for the low cost carrier.

The company’s revenue rose 37% to RM671.6 million, from RM491.1 million in the previous year’s corresponding quarter.

In a statement to Bursa Malaysia, the long-haul budget airline said that its loss before tax ballooned to RM132.4 million in 2QFY14, from RM58.6 in 2QFY13, due to higher operating costs coupled with lower yield.

“As a result of significant capacity increase of 48.2% of ASK (available seat kilometre) from 30 June 2013 and the need to stimulate demand to achieve load factor of 80.4% in the three months ended 30 June 2014, yield as measured by RASK has decreased 7%, from 11.60 sen in the three months ended 30 June 2013 to 10.79 sen in the three months ended 30 June 2014,” said the company.

For the six-month period to June 30, AAX’s net loss stood at RM140.1 million, compared to a net profit of RM17.9 million in the same period a year earlier. Meanwhile, cumulative revenue rose 38% to RM1.42 billion, from RM1.03 billion.

Going forward, the company remained positive on its prospects, despite reporting losses for the third consecutive quarter.

“These losses are attributable to the third consecutive quarter of significant year-on-year ASK capacity increases over 40%, which resulted in lower yields, from a higher proportion of promotional fares used to stimulate new demand creation to fill up the new capacity,” said AirAsia X.

The company said that new capacity usually takes about 12 months to break-even, adding that it expects positive RASK growth in the latter half of 2014.

“Although our capacity expansion has put short-term pressure on earnings performance, the long-term strategic advantages are very compelling.

“We now have our strongest route network, with multiple cities in each of our markets, and strong frequencies that lead to convenient transfer connections,” said Azran Osman-Rani, CEO of AirAsia X, in the result announcement today.

AAX share price staged a rebound recently, rising from 70 sen to a high of 88 sen last Wednesday. The stock closed at 82 sen, which is 34% below its initial public offer price of RM1.25.